Cannondale Corporation Announces Financial Results For the Third Quarter of Fiscal Year 2001

Apr 30, 2001, 01:00 ET from Cannondale Corporation

    BETHEL, Conn., April 30 /PRNewswire/ --
 Cannondale Corporation (Nasdaq: BIKE) today announced results for the third
 quarter of fiscal 2001, the period ended March 31, 2001.
     For the three months ended March 31, 2001, net sales were $32,636,000
 compared to $40,308,000 recorded for the same period last year.  Included in
 the net sales amount is approximately $1.7 million in motorsports sales.  The
 reduction in sales was due to dealers' cautious buying patterns relating to
 the weakening economy, adverse weather conditions, and a delay in delivery of
 bicycle accessories from vendors which affected shipments in March.  In
 addition, net sales were negatively affected by approximately $1.2 million
 relating to foreign exchange fluctuations.  The loss for the third quarter of
 fiscal 2001, prior to the recognition of $2,287,000 to record a valuation
 allowance for net deferred tax assets, was $3,064,000 compared to the loss of
 $762,000 recorded during the same period last year.  Although the Company
 expects to ultimately utilize its net deferred tax assets, a valuation
 allowance was established in accordance with Statement of Financial Accounting
 Standards No. 109.  The Company's bicycle business achieved pre-tax earnings
 of $559,000 for the third quarter of fiscal 2001 compared to pre-tax earnings
 of $2,021,000 for the third quarter of fiscal 2000.  The decrease in profits
 is commensurate with the factors noted above.
     The loss per share for the third quarter of fiscal 2001 was 41 cents,
 exclusive of the deferred tax asset valuation provision (30 cents per share),
 compared to the loss per share of 10 cents recorded for the same period last
 year.  The net loss per share for the third quarter of fiscal 2001 was
 71 cents.
     For the nine months ended March 31, 2001, net sales were $104,010,000,
 including approximately $3.2 million of motorsports shipments, compared to net
 sales of $118,393,000 recorded for the same period last year.  The reduction
 in sales was due to dealers' cautious buying patterns relating to the
 weakening economy, adverse weather conditions, and a delay in delivery of
 bicycle accessories from vendors which affected shipments in March.  In
 addition, net sales were negatively affected by approximately $6.5 million
 relating to foreign exchange fluctuations.  The loss for the first nine months
 of fiscal 2001, prior to an extraordinary loss of $552,000 relating to the
 write-off of deferred financing costs resulting from the early repayment of
 approximately $12,000,000 of long-term debt, and the recognition of
 $10,890,000 to record a valuation allowance for net deferred tax assets, as
 noted above, was $6,107,000 compared to the loss of $1,593,000 recorded during
 the prior-year period.  For the first nine months of fiscal 2001, the
 Company's bicycle business produced pre-tax earnings of $4,548,000 compared to
 the bicycle business pre-tax earnings of $3,892,000 for the same period last
 year.  This increase in the bicycle business profit was attributable to the
 increase in gross margin from 32.03% in the prior year to 32.40% in the
 current year primarily due to more favorable product mix, coupled with reduced
 selling, general and administrative expenses.
     The loss per share was 81 cents for the first nine months of fiscal 2001,
 exclusive of the extraordinary loss (7 cents per share) and the deferred tax
 asset valuation provision ($1.45 per share), compared to the net loss per
 share of 21 cents recorded for the same period last year.  The net loss per
 share for the first nine months of fiscal 2001 was $2.33.
     On April 27, 2001, Cannondale sold an aggregate of $4 million of
 convertible subordinated debentures to two individual investors, including
 Cannondale's Chairman, Chief Executive Officer and President, Joseph
 Montgomery.  The $2 million debenture issued to Mr. Montgomery is due June 28,
 2005 and is convertible into shares of Cannondale's common stock at an initial
 conversion price of $4.50 per share.  The $2 million debenture issued to a
 third party investor is due April 28, 2004 and is convertible into shares of
 Cannondale's common stock at an initial conversion price of $3.75 per share.
 Both debentures bear interest at an annual rate of 8%.  Cannondale intends to
 use the net proceeds from the sale of the debentures for working capital
 purposes.
     Prior year net sales and selling, general and administrative expenses have
 been restated pursuant to EITF Issue 00-10, Accounting for Shipping and
 Handling Fees and Costs.  In accordance with such, all shipping and handling
 billings to customers have been included in net sales, and all freight costs
 incurred for product shipments have been included in selling, general and
 administrative expenses.  Previously, the Company offset shipping and handling
 charges billed to customers and the related freight costs within selling,
 general and administrative expenses.  For the quarterly periods ended
 March 31, 2001 and April 1, 2000, shipping and handling billings of
 approximately $373,000 and $442,000, respectively, have been included in net
 sales.  For the nine months ended March 31, 2001 and April 1, 2000, shipping
 and handling billings of approximately $1,186,000 and $1,368,000,
 respectively, have been included in net sales.
     The third quarter also saw the official debut of the Cannondale FX400 ATV
 (All-Terrain Vehicle), and its first test rides by editors from ATV magazines.
 The reviews resulting from those test rides have appeared in recent weeks, and
 they are exceedingly positive.
     "The FX400 is a thrilling addition to the sport quad market," was how ATV
 Sport magazine's Glenn Hanson rated the new Cannondale.  "If (other ATV
 manufacturers) want to compete on the high end of the high-performance market,
 they better be working on something good or the FX400 will eat them alive."
 Hansen's comments were echoed by Adam Campbell of 4-Wheel ATV Action magazine,
 who dubbed the FX400 "the highest-tech quad ever developed."  Campbell added
 that, "in a contest of all-out performance with the Cannondale, it looks like
 Honda, Yamaha and Bombardier brought knives to a gun fight."
     Cannondale's bicycle division also debuted new designs during the third
 quarter.  In March, the Company unveiled the downhill-specific Gemini and the
 Scalpel, a lightweight, full-suspension model for cross-country racing.  The
 Scalpel will be raced by the team's cross-country athletes, and Scalpel models
 will also make their way into Cannondale dealerships for resale to consumers
 in the coming months.
     Matt Phillips of Mountain Bike magazine was one of the first editors to
 ride the Scalpel, and he was wowed by its technology.  After listing the
 Scalpel's many innovative features, Phillips noted that "this complete full
 suspension bike with tubeless tires and disc brakes weighs just 22 pounds.  I
 shake my head and think, 'Who else but Cannondale?'"
 
     This press release contains forward-looking statements, as defined under
 the Private Securities Litigation Reform Act of 1995.  Actual results may
 differ materially from those anticipated as a result of various risks and
 uncertainties, including risks and uncertainties described in this press
 release, as well as those detailed from time to time in the Company's periodic
 reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange
 Commission.  Readers are cautioned not to place undue reliance on these
 forward-looking statements which speak only as of the date hereof.  The
 Company undertakes no obligation to publish revised forward-looking statements
 to reflect events or circumstances after the date hereof or to reflect the
 occurrence of unanticipated events.
 
     Cannondale Corporation is the world's leading manufacturer of
 high-performance bicycles.  The Company's bicycles and bicycle accessories,
 which include clothing, packs and bags, HeadShok suspension forks and CODA
 components, are marketed under the Cannondale brand name and "Handmade in USA"
 logo, and are sold in the U.S. and in more than 60 foreign countries.  The
 Company has also entered the motorsports industry with its MX400 motocross
 motorcycle and FX400 ATV.  Two additional motorcycle models and another ATV
 are currently in development.
 
                    CANNONDALE CORPORATION AND SUBSIDIARIES
 
                     Condensed Consolidated Balance Sheets
                       (In thousands, except share data)
 
                                                  March 31, 2001  July 1, 2000
                                                    (unaudited)
 
     Assets
     Current assets:
     Cash                                              $1,920         $5,064
     Trade accounts receivable, less allowances of
     $11,146 and $10,076                               47,833         50,224
     Inventories                                       42,861         40,413
     Deferred income taxes                                 --          5,571
     Prepaid expenses and other current assets          3,719          4,618
     Total current assets                              96,333        105,890
     Property, plant and equipment, net                36,352         40,114
     Other assets                                       5,703         18,903
     Total assets                                    $138,388       $164,907
 
     Liabilities and stockholders' equity
     Current liabilities:
     Accounts payable                                 $13,970        $15,912
     Revolving credit advances                          4,038          2,235
     Income taxes payable                                  27            307
     Warranty and other accrued expenses                8,742          7,403
     Current installments of long-term debt             4,856          4,577
     Total current liabilities                         31,633         30,434
     Long-term debt, less current installments         54,760         63,363
     Other noncurrent liabilities                         437            424
     Total liabilities                                 86,830         94,221
     Commitments and contingencies                         --             --
 
     Stockholders' equity:
     Common stock, $.01 par value:
     Authorized shares - 40,000,000
     Issued shares - 8,821,871 and 8,808,125               88             88
     Additional paid-in capital                        57,978         57,935
     Retained earnings                                 21,253         38,802
     Less 1,292,900 shares in treasury at cost       (20,162)       (20,162)
     Accumulated other comprehensive loss             (7,599)        (5,977)
     Total stockholders' equity                        51,558         70,686
     Total liabilities and stockholders' equity      $138,388       $164,907
 
 
                    CANNONDALE CORPORATION AND SUBSIDIARIES
                Condensed Consolidated Statements of Operations
                     (In thousands, except per share data)
 
                                   Third      Third        Nine        Nine
                                  Quarter    Quarter      Months      Months
                                  Fiscal      Fiscal      Fiscal      Fiscal
                                   2001        2000        2001        2000
                                (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
     Net sales                    $32,636     $40,308     $104,010  $118,393
     Cost of sales                 25,895      27,233       77,089    81,631
     Gross profit                   6,741      13,075       26,921    36,762
 
     Expenses:
     Selling, general and
      administrative                9,005      10,607       27,275    30,484
     Research and development       1,500       2,432        5,417     6,621
                                   10,505      13,039       32,692    37,105
     Operating income (loss)      (3,764)          36      (5,771)     (343)
 
     Other income (expense):
     Interest expense             (1,486)     (1,901)      (5,036)   (4,305)
     Other income (expense)         (199)         531          192     1,265
                                  (1,685)     (1,370)      (4,844)   (3,040)
 
     Pretax loss                  (5,449)     (1,334)     (10,615)   (3,383)
 
     Income tax benefit             2,385         572        4,508     1,790
 
     Loss before provision for
      deferred tax asset valuation
      and extraordinary item      (3,064)       (762)      (6,107)   (1,593)
 
     Deferred tax asset
      valuation provision         (2,287)          --     (10,890)        --
 
     Loss before
      extraordinary item          (5,351)       (762)     (16,997)   (1,593)
 
     Extraordinary loss,
      net of $0 tax benefit            --          --        (552)        --
 
     Net loss                    $(5,351)      $(762)    $(17,549)  $(1,593)
 
 
     Basic and diluted loss per
      share before
      extraordinary item          $(0.71)     $(0.10)      $(2.26)   $(0.21)
 
     Extraordinary loss per share      --          --       (0.07)        --
 
     Basic and diluted
      loss per share              $(0.71)     $(0.10)      $(2.33)   $(0.21)
 
     Weighted-average common
      shares outstanding            7,529       7,503        7,520     7,495
 
                     MAKE YOUR OPINION COUNT -- Click Here
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SOURCE Cannondale Corporation
    BETHEL, Conn., April 30 /PRNewswire/ --
 Cannondale Corporation (Nasdaq: BIKE) today announced results for the third
 quarter of fiscal 2001, the period ended March 31, 2001.
     For the three months ended March 31, 2001, net sales were $32,636,000
 compared to $40,308,000 recorded for the same period last year.  Included in
 the net sales amount is approximately $1.7 million in motorsports sales.  The
 reduction in sales was due to dealers' cautious buying patterns relating to
 the weakening economy, adverse weather conditions, and a delay in delivery of
 bicycle accessories from vendors which affected shipments in March.  In
 addition, net sales were negatively affected by approximately $1.2 million
 relating to foreign exchange fluctuations.  The loss for the third quarter of
 fiscal 2001, prior to the recognition of $2,287,000 to record a valuation
 allowance for net deferred tax assets, was $3,064,000 compared to the loss of
 $762,000 recorded during the same period last year.  Although the Company
 expects to ultimately utilize its net deferred tax assets, a valuation
 allowance was established in accordance with Statement of Financial Accounting
 Standards No. 109.  The Company's bicycle business achieved pre-tax earnings
 of $559,000 for the third quarter of fiscal 2001 compared to pre-tax earnings
 of $2,021,000 for the third quarter of fiscal 2000.  The decrease in profits
 is commensurate with the factors noted above.
     The loss per share for the third quarter of fiscal 2001 was 41 cents,
 exclusive of the deferred tax asset valuation provision (30 cents per share),
 compared to the loss per share of 10 cents recorded for the same period last
 year.  The net loss per share for the third quarter of fiscal 2001 was
 71 cents.
     For the nine months ended March 31, 2001, net sales were $104,010,000,
 including approximately $3.2 million of motorsports shipments, compared to net
 sales of $118,393,000 recorded for the same period last year.  The reduction
 in sales was due to dealers' cautious buying patterns relating to the
 weakening economy, adverse weather conditions, and a delay in delivery of
 bicycle accessories from vendors which affected shipments in March.  In
 addition, net sales were negatively affected by approximately $6.5 million
 relating to foreign exchange fluctuations.  The loss for the first nine months
 of fiscal 2001, prior to an extraordinary loss of $552,000 relating to the
 write-off of deferred financing costs resulting from the early repayment of
 approximately $12,000,000 of long-term debt, and the recognition of
 $10,890,000 to record a valuation allowance for net deferred tax assets, as
 noted above, was $6,107,000 compared to the loss of $1,593,000 recorded during
 the prior-year period.  For the first nine months of fiscal 2001, the
 Company's bicycle business produced pre-tax earnings of $4,548,000 compared to
 the bicycle business pre-tax earnings of $3,892,000 for the same period last
 year.  This increase in the bicycle business profit was attributable to the
 increase in gross margin from 32.03% in the prior year to 32.40% in the
 current year primarily due to more favorable product mix, coupled with reduced
 selling, general and administrative expenses.
     The loss per share was 81 cents for the first nine months of fiscal 2001,
 exclusive of the extraordinary loss (7 cents per share) and the deferred tax
 asset valuation provision ($1.45 per share), compared to the net loss per
 share of 21 cents recorded for the same period last year.  The net loss per
 share for the first nine months of fiscal 2001 was $2.33.
     On April 27, 2001, Cannondale sold an aggregate of $4 million of
 convertible subordinated debentures to two individual investors, including
 Cannondale's Chairman, Chief Executive Officer and President, Joseph
 Montgomery.  The $2 million debenture issued to Mr. Montgomery is due June 28,
 2005 and is convertible into shares of Cannondale's common stock at an initial
 conversion price of $4.50 per share.  The $2 million debenture issued to a
 third party investor is due April 28, 2004 and is convertible into shares of
 Cannondale's common stock at an initial conversion price of $3.75 per share.
 Both debentures bear interest at an annual rate of 8%.  Cannondale intends to
 use the net proceeds from the sale of the debentures for working capital
 purposes.
     Prior year net sales and selling, general and administrative expenses have
 been restated pursuant to EITF Issue 00-10, Accounting for Shipping and
 Handling Fees and Costs.  In accordance with such, all shipping and handling
 billings to customers have been included in net sales, and all freight costs
 incurred for product shipments have been included in selling, general and
 administrative expenses.  Previously, the Company offset shipping and handling
 charges billed to customers and the related freight costs within selling,
 general and administrative expenses.  For the quarterly periods ended
 March 31, 2001 and April 1, 2000, shipping and handling billings of
 approximately $373,000 and $442,000, respectively, have been included in net
 sales.  For the nine months ended March 31, 2001 and April 1, 2000, shipping
 and handling billings of approximately $1,186,000 and $1,368,000,
 respectively, have been included in net sales.
     The third quarter also saw the official debut of the Cannondale FX400 ATV
 (All-Terrain Vehicle), and its first test rides by editors from ATV magazines.
 The reviews resulting from those test rides have appeared in recent weeks, and
 they are exceedingly positive.
     "The FX400 is a thrilling addition to the sport quad market," was how ATV
 Sport magazine's Glenn Hanson rated the new Cannondale.  "If (other ATV
 manufacturers) want to compete on the high end of the high-performance market,
 they better be working on something good or the FX400 will eat them alive."
 Hansen's comments were echoed by Adam Campbell of 4-Wheel ATV Action magazine,
 who dubbed the FX400 "the highest-tech quad ever developed."  Campbell added
 that, "in a contest of all-out performance with the Cannondale, it looks like
 Honda, Yamaha and Bombardier brought knives to a gun fight."
     Cannondale's bicycle division also debuted new designs during the third
 quarter.  In March, the Company unveiled the downhill-specific Gemini and the
 Scalpel, a lightweight, full-suspension model for cross-country racing.  The
 Scalpel will be raced by the team's cross-country athletes, and Scalpel models
 will also make their way into Cannondale dealerships for resale to consumers
 in the coming months.
     Matt Phillips of Mountain Bike magazine was one of the first editors to
 ride the Scalpel, and he was wowed by its technology.  After listing the
 Scalpel's many innovative features, Phillips noted that "this complete full
 suspension bike with tubeless tires and disc brakes weighs just 22 pounds.  I
 shake my head and think, 'Who else but Cannondale?'"
 
     This press release contains forward-looking statements, as defined under
 the Private Securities Litigation Reform Act of 1995.  Actual results may
 differ materially from those anticipated as a result of various risks and
 uncertainties, including risks and uncertainties described in this press
 release, as well as those detailed from time to time in the Company's periodic
 reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange
 Commission.  Readers are cautioned not to place undue reliance on these
 forward-looking statements which speak only as of the date hereof.  The
 Company undertakes no obligation to publish revised forward-looking statements
 to reflect events or circumstances after the date hereof or to reflect the
 occurrence of unanticipated events.
 
     Cannondale Corporation is the world's leading manufacturer of
 high-performance bicycles.  The Company's bicycles and bicycle accessories,
 which include clothing, packs and bags, HeadShok suspension forks and CODA
 components, are marketed under the Cannondale brand name and "Handmade in USA"
 logo, and are sold in the U.S. and in more than 60 foreign countries.  The
 Company has also entered the motorsports industry with its MX400 motocross
 motorcycle and FX400 ATV.  Two additional motorcycle models and another ATV
 are currently in development.
 
                    CANNONDALE CORPORATION AND SUBSIDIARIES
 
                     Condensed Consolidated Balance Sheets
                       (In thousands, except share data)
 
                                                  March 31, 2001  July 1, 2000
                                                    (unaudited)
 
     Assets
     Current assets:
     Cash                                              $1,920         $5,064
     Trade accounts receivable, less allowances of
     $11,146 and $10,076                               47,833         50,224
     Inventories                                       42,861         40,413
     Deferred income taxes                                 --          5,571
     Prepaid expenses and other current assets          3,719          4,618
     Total current assets                              96,333        105,890
     Property, plant and equipment, net                36,352         40,114
     Other assets                                       5,703         18,903
     Total assets                                    $138,388       $164,907
 
     Liabilities and stockholders' equity
     Current liabilities:
     Accounts payable                                 $13,970        $15,912
     Revolving credit advances                          4,038          2,235
     Income taxes payable                                  27            307
     Warranty and other accrued expenses                8,742          7,403
     Current installments of long-term debt             4,856          4,577
     Total current liabilities                         31,633         30,434
     Long-term debt, less current installments         54,760         63,363
     Other noncurrent liabilities                         437            424
     Total liabilities                                 86,830         94,221
     Commitments and contingencies                         --             --
 
     Stockholders' equity:
     Common stock, $.01 par value:
     Authorized shares - 40,000,000
     Issued shares - 8,821,871 and 8,808,125               88             88
     Additional paid-in capital                        57,978         57,935
     Retained earnings                                 21,253         38,802
     Less 1,292,900 shares in treasury at cost       (20,162)       (20,162)
     Accumulated other comprehensive loss             (7,599)        (5,977)
     Total stockholders' equity                        51,558         70,686
     Total liabilities and stockholders' equity      $138,388       $164,907
 
 
                    CANNONDALE CORPORATION AND SUBSIDIARIES
                Condensed Consolidated Statements of Operations
                     (In thousands, except per share data)
 
                                   Third      Third        Nine        Nine
                                  Quarter    Quarter      Months      Months
                                  Fiscal      Fiscal      Fiscal      Fiscal
                                   2001        2000        2001        2000
                                (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
     Net sales                    $32,636     $40,308     $104,010  $118,393
     Cost of sales                 25,895      27,233       77,089    81,631
     Gross profit                   6,741      13,075       26,921    36,762
 
     Expenses:
     Selling, general and
      administrative                9,005      10,607       27,275    30,484
     Research and development       1,500       2,432        5,417     6,621
                                   10,505      13,039       32,692    37,105
     Operating income (loss)      (3,764)          36      (5,771)     (343)
 
     Other income (expense):
     Interest expense             (1,486)     (1,901)      (5,036)   (4,305)
     Other income (expense)         (199)         531          192     1,265
                                  (1,685)     (1,370)      (4,844)   (3,040)
 
     Pretax loss                  (5,449)     (1,334)     (10,615)   (3,383)
 
     Income tax benefit             2,385         572        4,508     1,790
 
     Loss before provision for
      deferred tax asset valuation
      and extraordinary item      (3,064)       (762)      (6,107)   (1,593)
 
     Deferred tax asset
      valuation provision         (2,287)          --     (10,890)        --
 
     Loss before
      extraordinary item          (5,351)       (762)     (16,997)   (1,593)
 
     Extraordinary loss,
      net of $0 tax benefit            --          --        (552)        --
 
     Net loss                    $(5,351)      $(762)    $(17,549)  $(1,593)
 
 
     Basic and diluted loss per
      share before
      extraordinary item          $(0.71)     $(0.10)      $(2.26)   $(0.21)
 
     Extraordinary loss per share      --          --       (0.07)        --
 
     Basic and diluted
      loss per share              $(0.71)     $(0.10)      $(2.33)   $(0.21)
 
     Weighted-average common
      shares outstanding            7,529       7,503        7,520     7,495
 
                     MAKE YOUR OPINION COUNT -- Click Here
                http://tbutton.prnewswire.com/prn/11690X55434153
 
 SOURCE  Cannondale Corporation